1. Which method of making capital budgeting decisions do you believe would work best for Kay in purchasing new equipment for SWAN?
2. St. Luke’s Convalescent Center has $200,000 in surplus funds that it wishes to invest in marketable securities. If transaction costs to buy and sell the securities are $2,200 and the securities will be held for three months, what required annual yield must be earned before the investment makes economic sense?
a. 4.4%
b. 3.6%
c. 8.3%
d. 5.6%